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Paying Taxes as a Poker Player

1,467 Views on 12/3/24

Poker and Taxes

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It is tough to be enthusiastic about paying taxes. Even though the average poker player makes a few bucks occasionally, a few professionals consistently make six figures.

Every poker player, whether professional or amateur, worries about paying taxes on their winnings. Failure to pay tax deductions on profits in some countries may create problems.

Poker Taxes in Different Countries

Specific criteria may apply to render someone's earnings taxable, even in states where poker players may cash in their winnings without paying taxes. Knowing local tax regulations can help you when it comes to filing your winnings and losses.

United Kingdom

Earnings and winnings from gambling are not subject to taxation in the UK. Professional players are also exempt from withholding a portion of their earnings for tax purposes.

The government taxes the profits of all casinos with UKGC licenses rather than the players. Under the Gambling Tax Reform 2014, remote operators must pay taxes based on the "place of consumption" that HMRC determines.

Professional poker players in the UK may also benefit from tax-free gains to support their lifestyle.

But other ways exist to pay for additional services, such as sponsorship costs for public appearances or ad money for their commercially viable material. A professional player's trade-related income is subject to taxes.

United States

All US citizens' gambling earnings are taxable, as per the IRS. The classification of wins as "other income" is specified on Form 1040 and Form 1040-SR. Deductible losses incurred from gambling are categorized as "other itemized deductions."

Players must save complete records of their wins and losses, including receipts. Since their wins are their main source of income, professional players have a unique tax situation. The actual income tax rate regular workers pay also applies to all winnings.

Professional players must report their profits and expenses through the IRS Schedule C. Since winnings are classified as income, losses are likewise viewed as expenses or deductions.

France


France's gambling taxes are an enormous challenge for online companies. For instance, the 2020 budget bill proposed raising the poker tax to 37.7%.

A 2% tax on their cash game winnings is imposed on French gamblers. Whenever your annual poker earnings are below €32,600, you will be taxed at the progressive income tax rate of 66% of that income as "non-commercial profits" without the option to deduct expenditures.

Should your annual poker earnings be above €32,600, you are subject to the progressive income tax on the whole amount, with the possibility of deducting certain play-related expenditures.

Germany

In 2021, Germany implemented a contentious new levy on online poker games. A 5.3% "rollover tax" is now being imposed on cash games and tournaments in this country.

Right upon player seating, buy-ins are subject to the rollover tax. The operator will be instantly charged with €10.6 tax (200 x 0.053) if a player buys a seat in a cash game for €200 and plays one hand.

In Germany, earnings from poker games remain tax-free for recreational players.

If you regularly play a game of chance with a skill element, like poker and the tax authorities classify you as a "professional gambler," you will be required to pay taxes on your poker earnings. The player could deduct any prior losses against the taxable profits.

Spain

Licensed operators in Spain pay a 25 percent fee on gross gaming income.
Furthermore, profits from players are subject to normal income tax, starting at 24%, according to widely accepted interpretations of the current tax code; losses cannot be subtracted from the amount owed.

Conclusion

Lastly, taxes are a fact of life for all poker players, regardless of their level. They may not be the most exciting part of the game, but they are there nonetheless.
Managing your tax responsibilities and keeping your mind on the cards is easy if you stay informed, take action, and stay prepared.


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At PokerVIP we pride ourselves in recruiting top poker talent from around the World to help our users improve their game. With over 350 original training videos from over 30 renowned poker coaches, PokerVIP is one of the best resources ... Read More

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